[SMM Analysis] November Domestic Total Production of Lithium Carbonate Up 8% MoM and 49% YoY

In November, the domestic total production of lithium carbonate steadily increased, up 8% MoM and 49% YoY. Stimulated by continuously rising demand and the presence of certain arbitrage opportunities in the futures market, the overall operating rate of upstream lithium chemical smelters improved.

By raw material type, the total production of lithium carbonate derived from spodumene increased by 7% MoM in November. The increase mainly came from the ramp-up of lithium hydroxide production lines switch to lithium carbonate, and some lithium chemical smelters also increased production driven by profits in the delivery market. After several months of MoM decline, the trend of lithium carbonate derived from lepidolite reversed, increasing by 23% MoM. The increase was not only due to generally improved demand but also supplemented by the output from newly resumed smelters. The output of lithium carbonate derived from salt lake slightly decreased by 6% MoM due to weather impacts. The output of lithium carbonate from recycling continued to rise, up 13% MoM, driven by the increasing orders under tolling agreements from leading battery cell manufacturers for processing waste batteries.

Entering December, the downstream demand side's production schedule continues to maintain a high level of activity. The positive sentiment of upstream smelters' production is also rising, and it is expected that the domestic total production of lithium carbonate in December will increase by 8%-10% MoM, with the incremental part still coming from the lithium ore side.

From the current spot market transaction situation of lithium carbonate, the increase in downstream consumption has driven spot order purchases of lithium carbonate, significantly raising the center of spot transaction prices in November. As the year-end period approaches, although downstream production schedules remain optimistic, current purchasing sentiment is weak due to year-end inventory control considerations. Upstream smelters have a strong sentiment to stand firm on quotes as the long-term contract negotiation period approaches. Considering the strong supply and demand pattern of lithium carbonate and the accumulated inventory levels, it is expected that the spot prices of lithium carbonate will continue to show sideways movement.